-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lNREH1MUInc2q/mcqyOZLHzA5fUrl1kRbeEqheqBaqBcKAAzjABG63uKkCoNciCK BBTwHxprKZ6G8tdg/QYJ7Q== 0000950146-95-000074.txt : 19950612 0000950146-95-000074.hdr.sgml : 19950612 ACCESSION NUMBER: 0000950146-95-000074 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950307 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTEGRITY FUNDS CENTRAL INDEX KEY: 0000701265 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042912220 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03420 FILM NUMBER: 95518956 BUSINESS ADDRESS: STREET 1: 3410 S GALENA CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 2: 3410 SOUTH GALENA STREET 3RD FL CITY: DENVER STATE: CO ZIP: 80231 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL INTEGRITY FUNDS DATE OF NAME CHANGE: 19910329 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL LIQUID ASSETS TRUST DATE OF NAME CHANGE: 19880403 N-30D 1 INVESTMENT GRADE BOND FUND ANNUAL REPORT Oppenheimer Investment Grade Bond Fund Annual Report December 31, 1994 [photo depicting woman and girl shopping] "To help pay for extras, I count on the money I get from my investments." [logo] OppenheimerFunds This Fund is for people who want solid income and feel most comfortable getting it from quality investments. How Your Fund Is Managed Oppenheimer Investment Grade Bond Fund's portfolio is made up of investment grade corporate bonds, U.S. government securities, and high-quality money market instruments. Of these three types of investments, corporate bonds often offer the highest yields, but can come in all different levels of quality. That's why your Fund allocates assets to investment grade corporate bonds only--so it can seek high yields with less risk. And investing in U.S. government securities and high-quality money market instruments helps to further provide income with relative stability. Yield Standardized Yield For the 30 Days Ended 12/31/94:(1) Class A 6.76% Class B 6.34% Performance Total return at net asset value for the 12 months ended 12/31/94 was -3.87% for Class A shares and -4.53% for Class B shares.(2) The financial markets had a difficult year and, like many mutual funds, your Fund felt the effects. While difficult years are hard to accept, they're an inevitable part of investing. That's why keeping a long-term perspective is crucial to getting the most from your investment and helping you through short-term market fluctuations. Your Fund's average annual total returns at maximum offering price for Class A shares for the 1- and 5-year periods ended 12/31/94 and since inception of the Class on 4/15/88 were -8.43%, 5.97% and 6.79%, respectively. For Class B shares, average annual total returns for the 1-year period ended 12/31/94 and since inception of the Class on 5/1/93 were -9.03% and -2.67%, respectively.(3) Outlook "The past year was a challenging one for the bond market, but our outlook as we enter 1995 is very constructive. The Federal Reserve's efforts to fend off inflation, while temporarily disconcerting, have had their desired effect. Inflation remains under control, and with our ability to invest across the investment-grade spectrum--in corporate, asset-backed, mortgage-backed and U.S. government bonds--the Fund is positioned to deliver attractive real, inflation-adjusted returns." Mary Wilson, Portfolio Manager Massachusetts Mutual Life Insurance Co., The Fund's Sub-Advisor December 31, 1994 1. Standardized yield is net investment income calculated on a yield-to-maturity basis for the 30-day period ended 12/31/94, divided by the maximum offering price at the end of the period, compounded semi-annually and then annualized. Falling net asset values will tend to artificially raise yields. 2. Based on the change in net asset value per share from 12/31/93 to 12/31/94, without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. 3. Average annual total returns are based on a hypothetical investment held until 12/31/94, after deducting the current maximum initial sales charge of 4.75% for Class A shares and the contingent deferred sales charge of 5% (1 year) and 4% (since inception) for Class B shares. The Fund's maximum sales charge rate for Class A shares was lower during a portion of some of the periods shown, and actual investment results will be different as a result of the change. Class A and Class B shares were first publicly offered on 4/15/88 and 5/1/93, respectively. All figures assume reinvestment of dividends and capital gains distributions. Past performance is not indicative of future results. Investment and principal value on an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. 2 Oppenheimer Investment Grade Bond Fund Dear OppenheimerFunds Shareholder, The past year was marked by one of the greatest tests the bond markets faced in more than six decades. As the U.S. Federal Reserve undertook one of the most aggressive series of moves to raise interest rates in its history, bond prices declined across the board, leaving many investors to wonder what the future holds for interest rates and the fixed income markets. Changing interest rates and fluctuating bond prices are facts of life affecting all bond markets, and it's a bond market basic principle that when interest rates rise, bond prices generally decline. That is why we believe the best measure for any fixed income investment is its performance over the long term. And we believe the long-term outlook for the bond markets is excellent. We expect the Fed's attempt to preempt possible inflation, while temporarily disconcerting, to have its desired effect in 1995. The economy should start to slow, and although short-term rates may move up modestly from their present levels, long-term interest rates should stabilize in their current range. Long-term rates may even begin to decline as overblown concerns about inflation abate. Those concerns are, in fact, already fading. While the prices of some commodities have risen over the past year and U.S. manufacturing capacity utilization and employment rose to their highest levels in years, in today's globally competitive environment, price increases are difficult to pass on to either consumers or businesses. The inflation rate--as measured by the Consumer Price Index--continues to run at less than 3% a year, and there's nothing on the horizon to suggest to us that it will increase substantially anytime soon. As a result, bonds today offer some of the highest real, inflation-adjusted returns we have seen in years. At the same time, the changing political landscape reflected in results of the mid-term election bode well for the bond market over time. In addition to limiting the expectation that Congress will pass potentially inflationary government spending proposals, the realignment in Washington has raised the possibility of tax relief in the form of an expanded deduction for individual retirement savings or possibly a reduction in the capital gains tax rate. What specific action, if any, Congress will take on these proposals remains to be seen. But any action to reduce the federal deficit, cut spending, and reduce taxes should be good news for the investment markets overall. Together, these factors suggest to us that 1995 will be a rewarding time for bond market investors. We expect that as short-term rates rise and inflation holds at its current level, short-term investments should provide more attractive real, inflation-adjusted yields. Longer-term bonds in all sectors--corporate, municipal, and U.S. government--may also provide very attractive total return opportunities. Along with strong yields, longer-term bonds offer the prospect of modest price appreciation during 1995 as well. Your portfolio manager discusses your Fund's outlook on the following pages. We appreciate your confidence in OppenheimerFunds and we look forward to helping you continue to reach your investment goals. James C. Swain Chairman Oppenheimer Investment Grade Bond Fund Jon S. Fossel President Oppenheimer Investment Grade Bond Fund James C. Swain Jon S. Fossel January 23, 1995 3 Oppenheimer Investment Grade Bond Fund Q + A An interview with the Fund's managers. The Fund delivered an attractive yield over the last 12 months, but its performance was off for the year on a total return basis. What factors affected the Fund's results? One factor stands out: the Federal Reserve's aggressive moves to raise short-term interest rates to control inflation. Rising interest rates took a toll on all bonds and bond funds, and the bonds on which this Fund concentrated--those in the intermediate-maturity sector--were particularly affected. How did you respond to rising interest rates? We made a number of adjustments. As the corporate yield advantage over Treasury securities narrowed during the year, we reduced our corporate holdings somewhat, selling bonds that had performed well, including Marriott and Comdisco, and reinvesting the proceeds in asset-backed issues from issuers like Ford and Daimler-Benz. These issues, which are secured by short-term and medium-term receivables, combine very attractive yields with high credit quality. We also modestly increased our holdings of mortgage-backed bonds.(1) What made mortgage-backed securities so attractive in the past six months? As interest rates rose, the major risk in the mortgage market--that of pre-payments and refinancing by mortgage- holders--was reduced significantly. With interest rates at their current levels, the mortgage-backed market is much more stable and predictable than it was a year ago, while offering attractive yields. Of course, to keep potential price fluctuations to a minimum, we continue to invest in well-seasoned, well-structured mortgage-backed securities. How about Treasuries? Have you made any adjustments to that portion of the portfolio in the past six months? We have. Given the outlook for rising interest rates, we reduced the Fund's relative exposure to Treasuries, which tend to lag investment-grade corporate bonds in the mid-to-late stages of economic expansion. We also modestly reduced our Treasury durations--a technical measure of a bond portfolio's sensitivity to interest rate changes. At year end, our portfolio's duration was about half a year shorter than that of the Lehman Brothers Corporate/Government Bond Index. All in all, it sounds like you've positioned the portfolio somewhat conservatively. That's true. In addition to the adjustments we've made in our bond holdings, we've also increased our position in short-term money market securities somewhat, in an effort to "keep our powder dry" until the bond market stabilizes. What's your outlook for the Fund? Do you expect the markets to stabilize any time soon? We do; in fact, we're seeing signs of it today. Investors are beginning to recognize that there are no signs of runaway inflation or double-digit interest rates on the horizon. They're also recognizing that bonds offer some of the most attractive real, inflation-adjusted returns available in years. As a result, money is beginning to come back to the bond market, providing solid sup-port for bond prices. Mary Wilson Portfolio Manager 1. The Fund's portfolio is subject to change. 4 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------------------------------------------------------ Statement of Investments December 31, 1994 ------------------------------------------------------------------------------------------------------ Face Market Value Amount See Note 1 =================================================================================================================================== Short-Term Notes--14.9% - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Non-Cyclicals--2.4% - ----------------------------------------------------------------------------------------------------------------------------------- Food Wholesalers--2.4% Tyson Foods, Inc., 6.10%, 1/4/95 $2,410,000 $ 2,408,775 - ----------------------------------------------------------------------------------------------------------------------------------- Energy--2.5% - ----------------------------------------------------------------------------------------------------------------------------------- Oil: Integrated Domestic--2.5% Burlington Resources, Inc., 6.30%, 1/17/95 2,500,000 2,493,000 - ----------------------------------------------------------------------------------------------------------------------------------- Financial--3.2% - ----------------------------------------------------------------------------------------------------------------------------------- Diversified Finance--0.7% Ford Motor Credit Co., 5.80%, 1/9/95 555,000 555,000 ------------------------------------------------------------------------------------------------------ General Motors Acceptance Corp., 6.05%, 1/9/95 120,000 119,839 ------------ 674,839 - ----------------------------------------------------------------------------------------------------------------------------------- Financial Services: Miscellaneous--2.5% Countrywide Funding Corp., 6.30%, 1/6/95 2,500,000 2,497,812 - ----------------------------------------------------------------------------------------------------------------------------------- Utilities--6.8% - ----------------------------------------------------------------------------------------------------------------------------------- Electric Companies--4.5% Indiana & Michigan Power Co., 6.05%, 1/3/95 2,040,000 2,039,314 ------------------------------------------------------------------------------------------------------ Texas Electric Services Co., 6.20%, 1/5/95 2,500,000 2,498,278 ------------ 4,537,592 - ----------------------------------------------------------------------------------------------------------------------------------- Telephone--2.3% GTE Norwest, Inc., 5.88%, 1/13/95 2,340,000 2,335,414 ------------ Total Short-Term Notes (Cost $14,947,432) 14,947,432 =================================================================================================================================== Asset-Backed Securities--7.1% - ----------------------------------------------------------------------------------------------------------------------------------- Auto Loan--7.1% Daimler-Benz Vehicle Trust, Series 1994-A, Cl. A, 5.95%, 12/15/00 827,697 814,537 ------------------------------------------------------------------------------------------------------ Ford Credit Grantor Trust, Series 1994-B, Cl. A, 7.30%, 10/15/99 1,458,742 1,447,933 ------------------------------------------------------------------------------------------------------ General Motors Acceptance Corp., Grantor Trust, Series 1992-E, Cl. A, 4.75%, 8/15/97 454,750 445,615 ------------------------------------------------------------------------------------------------------ Nissan Auto Receivables Grantor Trust, Series 1994-A, Cl. A, 6.45%, 9/15/99 2,241,045 2,202,567 ------------------------------------------------------------------------------------------------------ Select Auto Receivable Trust, Series 1991-2 Asset-Backed Certificates, Cl. A, 7.65%, 7/15/96 194,180 193,881 ------------------------------------------------------------------------------------------------------ World Omni Automobile Lease Securitization Trust, Series 1994-A, Cl. A, 6.45%, 9/25/00 2,000,000 1,967,360 ------------ Total Asset-Backed Securities (Cost $7,163,638) 7,071,893 =================================================================================================================================== Mortgage-Backed Obligations--13.3% - ----------------------------------------------------------------------------------------------------------------------------------- Government Agency--11.3% - ----------------------------------------------------------------------------------------------------------------------------------- FHLMC/FNMA/Sponsored--7.1% Federal Home Loan Mortgage Corp., Certificates of Participation, 9%, 3/1/17 770,177 772,234 ------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Certificates of Participation, Series 17-039, 13.50%, 11/1/10 91,657 101,813 ------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Certificates of Participation, Series 17-094, 12.50%, 4/1/14 50,645 55,629 ------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Collateralized Mortgage Obligation Gtd. Multiclass Certificates of Participation, 7.50%, 2/15/07 2,000,000 1,898,120 ------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Multiclass Mortgage Participation Certificates, Series 1460, Cl. 1460-H, 7%, 5/15/07 1,500,000 1,374,090 ------------------------------------------------------------------------------------------------------ Federal National Mortgage Assn., Gtd. Mtg. Pass-Through Certificates, 8%, 8/1/17 1,116,105 1,097,712 ------------------------------------------------------------------------------------------------------ Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 1993-191, Cl. PD, 5.40%, 4/25/04 1,500,000 1,365,300
5 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------------------------------------------------------ Statement of Investments (Continued) ------------------------------------------------------------------------------------------------------ Face Market Value Amount See Note 1 - ----------------------------------------------------------------------------------------------------------------------------------- FHLMC/FNMA/Sponsored (continued) Federal National Mortgage Assn., Interest-Only Collateralized Mortgage Obligation Gtd. Real Estate Mortgage Investment Conduit Pass-Through Certificates, Trust 1992 G-57, Cl. SA, 44.60%, 10/25/22(1) $ 568,843 $ 443,698 ------------ 7,108,596 - ----------------------------------------------------------------------------------------------------------------------------------- GNMA/Guaranteed:--4.2% Government National Mortgage Assn.: 10%, 11/15/09 595,139 622,481 12%, 1/15/99 24,402 25,944 12%, 1/15/99 66,980 71,210 12%, 5/15/14 2,184 2,423 12.75%, 6/15/15 44,137 49,704 15%, 2/15/12 26,167 30,505 8%, 10/15/05 243,215 239,689 8%, 10/15/06 377,529 371,447 8%, 6/15/05 125,505 123,686 8%, 6/15/05 97,196 95,787 8%, 6/15/05 132,000 130,087 8%, 7/15/05 222,830 219,600 8%, 7/15/05 326,463 321,730 8%, 7/15/05 109,149 107,567 8%, 7/15/06 167,313 164,618 8%, 7/15/06 216,029 212,549 8%, 8/15/05 135,305 133,344 8%, 8/15/05 146,311 144,190 8%, 9/15/05 309,653 305,163 8%, 9/15/05 158,612 156,312 9%, 2/15/09 22,973 23,335 9%, 2/15/09 234,544 238,238 9%, 3/15/09 167,088 169,720 9%, 3/15/09 25,494 25,896 9%, 5/15/09 28,368 28,815 9%, 6/15/09 159,386 161,897 ------------ 4,175,937 - ----------------------------------------------------------------------------------------------------------------------------------- Other--2.0% JHM Acceptance Corp., 8.96% Collateralized Mortgage Obligation Bonds, Series E, Cl. E-6, 4/1/19 2,000,000 2,008,900 ------------ Total Mortgage-Backed Obligations (Cost $14,177,957) 13,293,433 =================================================================================================================================== U.S. Government Obligations--43.8% - ----------------------------------------------------------------------------------------------------------------------------------- Agency--3.8% - ----------------------------------------------------------------------------------------------------------------------------------- Government Agency/ Full Faith--3.8% Allentown, Pennsylvania, U.S. Government Gtd. Nts., Series A, 8.74%, 8/1/01 65,000 66,092 ------------------------------------------------------------------------------------------------------ Babylon, New York, U.S. Government Gtd. Nts., Series A, 5.93%, 8/1/99 115,000 104,767 ------------------------------------------------------------------------------------------------------ Bakersfield, California, U.S. Government Gtd. Nts., Series A, 5.93%, 8/1/99 255,000 232,311 ------------------------------------------------------------------------------------------------------ Boston, Massachusetts, U.S. Government Gtd. Nts., Series A, 5.93%, 8/1/99 795,000 724,262 ------------------------------------------------------------------------------------------------------ Buena Vista Township, New Jersey, U.S. Government Gtd. Nts., Series A, 5.93%, 8/1/99 270,000 245,976
6 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------ Face Market Value Amount See Note 1 - ----------------------------------------------------------------------------------------------------------------------------------- Government Agency/ Full Faith (continued) Buffalo, New York, U.S. Government Gtd. Nts., Series A, 5.93%, 8/1/99 $ 400,000 $ 364,409 ------------------------------------------------------------------------------------------------------ Detroit, Michigan, U.S. Government Gtd. Nts., Series A, 5.93%, 8/1/99 405,000 368,964 ------------------------------------------------------------------------------------------------------ Fajardo, Puerto Rico, U.S. Government Gtd. Nts., Series A, 8.74%, 8/1/01 300,000 305,042 ------------------------------------------------------------------------------------------------------ New Haven, Connecticut, U.S. Government Gtd. Nts., Series A, 8.74%, 8/1/01 400,000 406,722 ------------------------------------------------------------------------------------------------------ Roanoke, Virginia, U.S. Government Gtd. Nts., Series A, 5.93%, 8/1/99 220,000 200,425 ------------------------------------------------------------------------------------------------------ Sacramento County, California Redevelopment Agency U.S. Government Gtd. Nts., Series 94A, 5.93%, 8/1/99 240,000 218,390 ------------------------------------------------------------------------------------------------------ Tacoma, Washington, U.S. Government Gtd. Nts., Series 94A, 5.93%, 8/1/99 165,000 150,319 ------------------------------------------------------------------------------------------------------ Trenton, New Jersey, U.S. Government Gtd. Nts., Series A, 5.93%, 8/1/99 135,000 122,988 ------------------------------------------------------------------------------------------------------ Tujillo Alto, Puerto Rico, U.S. Government Gtd. Nts., Series A, 8.74%, 8/1/01 235,000 238,949 ------------ 3,749,616 - ----------------------------------------------------------------------------------------------------------------------------------- Treasury--40.0% U.S. Treasury Bonds: 7.125%, 2/15/23 4,000,000 3,638,748 7.25%, 8/15/22 4,900,000 4,521,778 7.875%, 2/15/21 900,000 888,188 8%, 11/15/21 2,000,000 2,006,874 ------------------------------------------------------------------------------------------------------ U.S. Treasury Notes: 6.375%, 8/15/02 2,750,000 2,519,687 7%, 4/15/99 10,700,000 10,372,312 7.25%, 8/15/04 10,000,000 9,600,000 8.50%, 7/15/97 6,400,000 6,504,000 ------------ 40,051,587 ------------ Total U.S. Government Obligations (Cost $47,152,705) 43,801,203 =================================================================================================================================== Foreign Government Obligations--0.9% Iceland (Republic of) Nts., 6.125%, 2/1/04 (Cost $989,168) 1,000,000 857,030 =================================================================================================================================== Corporate Bonds and Notes--29.0% - ----------------------------------------------------------------------------------------------------------------------------------- Basic Materials--5.5% - ----------------------------------------------------------------------------------------------------------------------------------- Chemicals--0.4% Imcera Group, Inc., 6% Nts., 10/15/03 500,000 424,747 - ----------------------------------------------------------------------------------------------------------------------------------- Metals--3.5% AMAX, Inc., 9.875% Nts., 6/13/01 1,000,000 1,041,957 ------------------------------------------------------------------------------------------------------ Newmont Mining Corp., 8.625% Nts., 4/1/02 1,000,000 985,022 ------------------------------------------------------------------------------------------------------ Teck Corp., 8.70% Debs., 5/1/02 1,500,000 1,479,052 ------------ 3,506,031 - ----------------------------------------------------------------------------------------------------------------------------------- Paper and Forest Products--1.6% Georgia-Pacific Corp., 9.95% Debs., 6/15/02 1,500,000 1,600,647 - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Cyclicals--3.0% - ----------------------------------------------------------------------------------------------------------------------------------- Automotive--1.1% Chrysler Corp., 10.40% Nts., 8/1/99 1,000,000 1,048,078 - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Goods and Services--1.0% Toro Co. (The), 11% Debs., 8/1/17 1,000,000 1,041,250 - ----------------------------------------------------------------------------------------------------------------------------------- Media--0.9% News America Holdings, Inc., 7.50% Gtd. Sr. Nts., 3/1/00 1,000,000 945,495 - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Non-Cyclicals--2.0% - ----------------------------------------------------------------------------------------------------------------------------------- Food--1.0% Wendy's International, Inc., 12.125% Debs., 4/1/95 1,000,000 1,010,211 - ----------------------------------------------------------------------------------------------------------------------------------- Healthcare--1.0% Baxter International, Inc., 9.25% Nts., 9/15/96 1,000,000 1,018,178
7 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------------------------------------------------------ Statement of Investments (Continued) ------------------------------------------------------------------------------------------------------ Face Market Value Amount See Note 1 - ----------------------------------------------------------------------------------------------------------------------------------- Energy--4.5% Enron Corp., 8.10% Nts., 12/15/96 $1,500,000 $ 1,499,236 ------------------------------------------------------------------------------------------------------ Union Oil Co. of California, 8.75% Nts., 8/15/01 1,500,000 1,517,873 ------------------------------------------------------------------------------------------------------ Union Oil Co. of California, 9.625% Gtd. Debs., 5/15/95 1,500,000 1,513,434 ------------ 4,530,543 - ----------------------------------------------------------------------------------------------------------------------------------- Financial--5.9% Ford Motor Credit Co., 9.90% Med.-Term Nts., 11/6/97 2,000,000 2,057,252 ------------------------------------------------------------------------------------------------------ Goldman Sachs Group, LP, 6.20% Nts., 2/15/01 1,500,000 1,312,969 ------------------------------------------------------------------------------------------------------ Leucadia National Corp., 7.75% Sr. Nts., 8/15/13 2,000,000 1,757,329 ------------------------------------------------------------------------------------------------------ PaineWebber Group, Inc., 6.50% Nts., 11/1/05 1,000,000 794,856 ------------ 5,922,406 - ----------------------------------------------------------------------------------------------------------------------------------- Industrial--3.8% - ----------------------------------------------------------------------------------------------------------------------------------- General Industrial--1.0% Thomas & Betts Corp., 8.25% Sr. Nts., 1/15/04 1,000,000 976,858 - ----------------------------------------------------------------------------------------------------------------------------------- Transportation--2.8% AMR Corp., 9% Debs., 8/1/12 1,500,000 1,353,010 ------------------------------------------------------------------------------------------------------ United Air Lines, Inc., 10.11% Equipment Trust Certificates, Series 91B, 2/19/06 1,449,687 1,409,815 ------------ 2,762,825 - ----------------------------------------------------------------------------------------------------------------------------------- Technology--3.3% - ----------------------------------------------------------------------------------------------------------------------------------- Aerospace/Defense--3.3% McDonnell Douglas Corp., 9.25% Nts., 4/1/02 2,750,000 2,812,540 ------------------------------------------------------------------------------------------------------ Textron, Inc., 9.55% Med.-Term Nts., 3/19/01 500,000 525,255 ------------ 3,337,795 - ----------------------------------------------------------------------------------------------------------------------------------- Utilities--1.0% Tenaga Nasional Berhad, 7.875% Nts., 6/15/04(2) 1,000,000 951,846 ------------ Total Corporate Bonds and Notes (Cost $30,473,758) 29,076,910 Shares =================================================================================================================================== Common Stocks--0.0% - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Non-Cyclicals--0.0% - ----------------------------------------------------------------------------------------------------------------------------------- Food Processing--0.0% Doskocil Cos., Inc. (Cost $0) 1,761 13,208 - ----------------------------------------------------------------------------------------------------------------------------------- Total Investments, at Value (Cost $114,904,658) 109.0% 109,061,109 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities in Excess of Other Assets (9.0) (8,970,361) ---------- ------------ Net Assets 100.0% $100,090,748 ========== ============ 1. Interest rate resets monthly, inversely related to LIBOR. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities are subject to the risk of accelerated principal paydowns as interest rates decline. The principal amount represents the notional amount on which current interest is calculated. 2. Restricted security--See Note 6 of Notes to Financial Statements. See accompanying Notes to Financial Statements.
8 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------------------------------------------------------ Statement of Assets and Liabilities December 31, 1994 ------------------------------------------------------------------------------------------------------ =================================================================================================================================== Assets Investments, at value (cost $114,904,658)--see accompanying statement $109,061,109 ------------------------------------------------------------------------------------------------------ Receivables: Interest and principal paydowns 1,694,107 Shares of beneficial interest sold 202,489 ------------------------------------------------------------------------------------------------------ Other 55,797 ------------ Total assets 111,013,502 =================================================================================================================================== Liabilities Bank overdraft 57,356 ------------------------------------------------------------------------------------------------------ Payables and other liabilities: Investments purchased 9,823,047 Dividends 646,989 Shares of beneficial interest redeemed 258,588 Distribution and service plan fees--Note 4 65,541 Deferred trustee fees--Note 5 18,086 Other 53,147 ------------ Total liabilities 10,922,754 =================================================================================================================================== Net Assets $100,090,748 ============ =================================================================================================================================== Composition of Net Assets Paid-in capital $110,009,506 ------------------------------------------------------------------------------------------------------ Undistributed (overdistributed) net investment income (204,894) ------------------------------------------------------------------------------------------------------ Accumulated net realized gain (loss) from investment transactions (3,870,315 ------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) on investments--Note 3 (5,843,549) ------------- Net assets $100,090,748 ============= =================================================================================================================================== Net Asset Value Per Share Class A Shares: Net asset value and redemption price per share (based on net assets of $96,639,607 and 9,653,273 shares of beneficial interest outstanding) $10.01 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $10.51 ------------------------------------------------------------------------------------------------------ Class B Shares: Net asset value, redemption price and offering price per share (based on net assets of $3,451,141 and 344,660 shares of beneficial interest outstanding) $10.01
See accompanying Notes to Financial Statements. 9 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------------------------------------------------------ Statement of Operations For the Year Ended December 31, 1994 ------------------------------------------------------------------------------------------------------ =================================================================================================================================== Investment Income Interest $ 7,667,379 =================================================================================================================================== Expenses Management fees--Note 4 522,205 ------------------------------------------------------------------------------------------------------ Distribution and service plan fees: Class A--Note 4 247,136 Class B--Note 4 26,383 ------------------------------------------------------------------------------------------------------ Transfer and shareholder servicing agent fees--Note 4 184,806 ------------------------------------------------------------------------------------------------------ Shareholder reports 80,889 ------------------------------------------------------------------------------------------------------ Legal and auditing fees 13,761 ------------------------------------------------------------------------------------------------------ Trustees' fees and expenses 12,864 ------------------------------------------------------------------------------------------------------ Custodian fees and expenses 12,743 ------------------------------------------------------------------------------------------------------ Registration and filing fees: Class A 162 Class B 603 ------------------------------------------------------------------------------------------------------ Other 28,219 ----------- Total expenses 1,129,771 =================================================================================================================================== Net Investment Income (Loss) 6,537,608 =================================================================================================================================== Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments (2,274,518) ------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation on investments (8,559,673) ----------- Net realized and unrealized gain (loss) on investments (10,834,191) =================================================================================================================================== Net Increase (Decrease) in Net Assets Resulting From Operations $(4,296,583) ===========
See accompanying Notes to Financial Statements. 10 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------------------------------------------------------ Statements of Changes in Net Assets ------------------------------------------------------------------------------------------------------ Year Ended December 31, 1994 1993 =================================================================================================================================== Operations Net investment income (loss) $6,537,608 $ 6,955,080 ------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments (2,274,518) 3,772,429 ------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation on investments (8,559,673) 22,233 ------------ ------------ Net increase (decrease) in net assets resulting from operations (4,296,583) 10,749,742 =================================================================================================================================== Dividends and Distributions To Shareholders Dividends from net investment income: Class A ($.6539 and $.707 per share, respectively) (6,381,575) (7,067,709) Class B ($.5754 and $.42 per share, respectively) (156,032) (33,652) ------------------------------------------------------------------------------------------------------ Dividends in excess of net investment income: Class A ($.0306 per share) (298,880) -- Class B ($.027 per share) (7,308) -- =================================================================================================================================== Beneficial Interest Transactions Net increase (decrease) in net assets resulting from Class A beneficial interest transactions--Note 2 (3,255,547) 802,199 ------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from Class B beneficial interest transactions--Note 2 1,918,288 1,828,205 =================================================================================================================================== Net Assets Total increase (decrease) (12,477,637) 6,278,785 ------------------------------------------------------------------------------------------------------ Beginning of period 112,568,385 106,289,600 ------------ ------------ End of period (including overdistributed net investment income of $204,894 and $56,074, respectively) $100,090,748 $112,568,385 ============ ============
See accompanying Notes to Financial Statements. 11 Oppenheimer Investment Grade Bond Fund
----------------------------------------------------------------------------------- Financial Highlights ----------------------------------------------------------------------------------- Class A ----------------------------------------------------------------------------------- Eleven Months Ended Year Ended December 31, Dec. 31, 1994 1993 1992 1991(3) 1990 1989 1988(2) ==================================================================================================================== Per Share Operating Data: Net asset value, beginning of period $11.12 $10.74 $10.80 $ 9.86 $10.29 $10.12 $10.55 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .65 .69 .75 .82 .88(4) .92 .93 Net realized and unrealized gain (loss) on investments (1.08) .40 (.05) .90 (.43) .19 (.36) ------- ------- ------- ------- ------ ------- ------- Total income (loss) from investment operations (.43) 1.09 .70 1.72 .45 1.11 .57 - ------------------------------------------------------------------------------------------------------------------- Dividends to shareholders: Dividends from net investment income (.65) (.71) (.76) (.78) (.88) (.94) (1.00) Dividends in excess of net investment income (.03) -- -- -- -- -- -- ------- ------- ------- ------- ------ ------- ------- Total dividends to shareholders (.68) (.71) (.76) (.78) (.88) (.94) (1.00) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.01 $ 11.12 $ 10.74 $ 10.80 $ 9.86 $ 10.29 $ 10.12 ======= ======= ======= ======= ====== ======= ======= ==================================================================================================================== Total Return, at Net Asset Value(5) (3.87)% 10.30% 6.77% 18.28% 4.74% 11.31% 4.48% ==================================================================================================================== Ratios/Supplemental Data: Net assets, end of period (in thousands) $96,640 $110,759 $106,290 $90,623 $87,021 $96,380 $102,293 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $102,168 $111,702 $ 98,672 $86,471 $ 90,065 $100,891 $111,264 - ------------------------------------------------------------------------------------------------------------------- Number of shares outstanding at end of period (in thousands) 9,653 9,963 9,899 8,390 8,829 9,369 10,108 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 6.25% 6.20% 7.00% 8.02% 8.85% 8.85% 8.75% Expenses 1.06% 1.06% 1.10% 1.23% 1.24%(4) 1.14% 1.05% - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(7) 70.3% 110.1% 116.4% 97.1% 80.4% 41.3% 45.0%
------------------------------------------------------------------------ Financial Highlights (continued) ------------------------------------------------------------------------ Class A (continued) Class B -------------------------------------------------------------- -------- Year Period Ended Ended Year Ended January 31, Dec. 31, Dec. 31, 1988(2) 1987(2) 1986(2) 1985(2) 1994 1993(1) ======================================================================================================= Per Share Operating Data: Net asset value, beginning of period $ 11.30 $ 11.16 $ 10.91 $ 11.00 $ 11.11 $ 11.10 - ------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 1.09 1.16 1.22 1.27 .58 .40 Net realized and unrealized gain (loss) on investments (.55) .22 .35 (.04) (1.08) .03 ------- ------- ------- ------- ------- ------- Total income (loss) from investment operations .54 1.38 1.57 1.23 (.50) .43 - ------------------------------------------------------------------------------------------------------- Dividends to shareholders: Dividends from net investment income (1.29) (1.24) (1.32) (1.32) (.57) (.42) Dividends in excess of net investment income -- -- -- -- (.03) -- ------- ------- ------- ------- ------- ------- Total dividends to shareholders (1.29) (1.24) (1.32) (1.32) (.60) (.42) - ------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.55 $ 11.30 $ 11.16 $ 10.91 $ 10.01 $ 11.11 ======= ======= ======= ======= ======= ======= ======================================================================================================= Total Return, at Net Asset Value(5) N/A N/A N/A N/A (4.53)% 3.91% ======================================================================================================= Ratios/Supplemental Data: Net assets, end of period (in thousands) $118,568 $125,513 $121,979 $117,293 $3,451 $1,809 - ------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $118,724 $123,045 $118,253 $111,235 $2,747 $ 922 - ------------------------------------------------------------------------------------------------------- Number of shares outstanding at end of period (in thousands) 11,234 11,103 10,930 10,751 345 163 - ------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 10.28% 10.45% 11.26% 12.21% 5.53% 4.80%(6) Expenses .98% .93% .97% 1.01% 1.78% 1.90%(6) - ------------------------------------------------------------------------------------------------------- Portfolio turnover rate(7) 19.5% 59.8% 36.5% 76.7% 70.3% 110.1% 1. For the period from May 1, 1993 (inception of offering) to December 31, 1993. 2. Operating results prior to April 15, 1988 were achieved by the Fund's predecessor corporation as a closed-end fund under different investment objectives and policies. Such results are thus not necessarily representative of operating results the Fund may achieve under its current investment objectives and policies. 3. On March 28, 1991, Oppenheimer Management Corporation became the investment advisor to the Fund. 4. Net investment income would have been $.87 absent the voluntary expense limitation, resulting in an expense ratio of 1.26%. 5. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. 6. Annualized. 7. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the year ended December 31, 1994 were $67,852,873 and $67,362,839, respectively. See accompanying Notes to Financial Statements.
12 Oppenheimer Investment Grade Bond Fund ----------------------------------------------------------------------------------------------------- Notes to Financial Statements ----------------------------------------------------------------------------------------------------- =================================================================================================================================== 1. Significant Accounting Policies Oppenheimer Investment Grade Bond Fund (the Fund) is a separate fund of Oppenheimer Integrity Funds, a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund's investment advisor is Oppenheimer Management Corporation (the Manager). The Fund offers both Class A and Class B shares. Class A shares are sold with a front-end sales charge. Class B shares may be subject to a contingent deferred sales charge. Both classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan, expenses directly attributable to a particular class and exclusive voting rights with respect to matters affecting a single class. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. ----------------------------------------------------------------------------------------------------- Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New York time) on each trading day. Long-term debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Long-term debt securities which cannot be valued by the approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Forward foreign currency contracts are valued at the closing price on the London foreign exchange market on a daily basis. Options are valued based upon the last sale price on the principal exchange on which the option is traded or, in the absence of any transactions that day, the value is based upon the last sale on the prior trading date if it is within the spread between the closing bid and asked prices. If the last sale price is outside the spread, the closing bid or asked price closest to the last reported sale price is used. ----------------------------------------------------------------------------------------------------- Allocation of Income, Expenses and Gains and Losses. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. ----------------------------------------------------------------------------------------------------- Federal Income Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income tax provision is required. At December 31, 1994, the Fund had available for federal income tax purposes an unused capital loss carryover of approximately $3,738,000, $442,000 of which will expire in 1997, $958,000 in 1998 and $2,338,000 in 2002. ----------------------------------------------------------------------------------------------------- Distributions to Shareholders. The Fund intends to declare dividends separately for Class A and Class B shares from net investment income each day the New York Stock Exchange is open for business and pay such dividends monthly. Distributions from net realized gains on investments, if any, will be declared at least once each year. ----------------------------------------------------------------------------------------------------- Change in Accounting for Distributions to Shareholders. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains and losses. The character of the distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gain (loss) was recorded by the Fund. Effective January 1, 1994, the Fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the Fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, subsequent to December 31, 1993, amounts have been reclassified to reflect a decrease in paid-in capital of $29,803, an increase in undistributed net investment income of $42,134, and an increase in undistributed capital loss on investments of $12,331. During the year ended December 31, 1994, in accordance with Statement of Position 93-2, undistributed net investment income was increased by $115,233 and undistributed capital loss on investments was increased by the same amount.
13 Oppenheimer Investment Grade Bond Fund ----------------------------------------------------------------------------------------------------- Notes to Financial Statements (Continued) ----------------------------------------------------------------------------------------------------- =================================================================================================================================== 1. Significant Accounting Policies (continued) Other. Investment transactions are accounted for on the date the investments are purchased or sold (trade date). Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. =================================================================================================================================== 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
Year Ended December 31, 1994 Year Ended December 31, 1993(1) ---------------------------- --------------------------------- Shares Amount Shares Amount ----------------------------------------------------------------------------------------------------- Class A: Sold 1,071,379 $ 11,256,317 2,953,788 $ 33,325,053 Dividends reinvested 323,100 3,353,309 259,953 2,897,712 Redeemed (1,704,508) (17,865,173) (3,149,098) (35,420,566) --------- ------------ --------- ------------ Net increase (decrease) (310,029) $ (3,255,547) 64,643 $ 802,199 ========= ============ ========= ============ ----------------------------------------------------------------------------------------------------- Class B: Sold 293,817 $ 3,089,618 195,606 $ 2,198,191 Dividends reinvested 11,974 123,504 2,293 25,726 Redeemed (123,969) (1,294,834) (35,061) (395,712) --------- ------------ --------- ------------ Net increase 181,822 $ 1,918,288 162,838 $ 1,828,205 ========= ============ ========= ============ 1. For the year ended December 31, 1993 for Class A shares and for the period from May 1, 1993 (inception of offering) to December 31, 1993 for Class B shares. =================================================================================================================================== 3. Unrealized Gains and Losses on Investments At December 31, 1994, net unrealized depreciation on investments of $5,843,549 was composed of gross appreciation of $404,576, and gross depreciation of $6,248,125. =================================================================================================================================== 4. Management Fees And Other Transactions With Affiliates Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for an annual fee of .50% on the first $100 million of net assets with a reduction of .05% on each $200 million thereafter, to .35% on net assets in excess of $500 million. The Manager has agreed to reimburse the Fund if aggregate expenses (with specified exceptions) exceed the most stringent applicable regulatory limit on Fund expenses. For the year ended December 31, 1994, commissions (sales charges paid by investors) on sales of Class A shares totaled $143,088, of which $67,090 was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. During the year ended December 31, 1994, OFDI received contingent deferred sales charges of $8,916 upon redemption of Class B shares, as reimbursement for sales commissions advanced by OFDI at the time of sale of such shares. Oppenheimer Shareholder Services (OSS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund, and for other registered investment companies. OSS's total costs of providing such services are allocated ratably to these companies. Under separate approved plans, each class may expend up to .25% of its net assets annually to reimburse OFDI for costs incurred in connection with the personal service and maintenance of accounts that hold shares of the Fund, including amounts paid to brokers, dealers, banks and other institutions. In addition, Class B shares are subject to an asset-based sales charge of .75% of net assets annually, to reimburse OFDI for sales commissions paid from its own resources at the time of sale and associated financing costs. In the event of termination or discontinuance of the Class B plan, the Board of Trustees may allow the Fund to continue payment of the asset-based sales charge to OFDI for distribution expenses incurred on Class B shares sold prior to termination or discontinuance of the plan. During the year ended December 31, 1994, OFDI paid $154,100 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses and retained $27,341 as reimbursement for Class B sales commissions and service fee advances, as well as financing costs.
14 Oppenheimer Investment Grade Bond Fund =================================================================================================================================== 5. Deferred Trustee Compensation A former trustee elected to defer receipt of fees earned. These deferred fees earn interest at a rate determined by the current Board of Trustees at the beginning of each calendar year, compounded each quarter-end. As of December 31, 1994, the Fund was incurring interest at a rate of 5.22% per annum. Deferred fees are payable in annual installments, with accrued interest, each April 1 through 1995. =================================================================================================================================== 6. Restricted Securities The Fund owns securities purchased in private placement transactions, without registration under the Securities Act of 1933 (the Act). The securities are valued under methods approved by the Board of Trustees as reflecting fair value. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase) in restricted and illiquid securities, excluding securities eligible for resale pursuant to rule 144A of the Act that are determined to be liquid by the Board of Trustees or by the Manager under Board-approved guidelines. Valuation Per Unit Security Acquisition Date Cost Per Unit of December 31, 1994 ----------------------------------------------------------------------------------------------------- Tenaga Nasional Berhad 7.875% Nts., 6/15/04(1) 9/27/94 $96.79 $95.18 1. Transferable under Rule 144A of the Act.
15 Oppenheimer Investment Grade Bond Fund ----------------------------------------------------------------------------------------------------- Independent Auditors' Report ----------------------------------------------------------------------------------------------------- =================================================================================================================================== The Board of Trustees and Shareholders of Oppenheimer Investment Grade Bond Fund: We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Oppenheimer Investment Grade Bond Fund as of December 31, 1994, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended December 31, 1994 and 1993 and the financial highlights for the period January 1, 1991 to December 31, 1994. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights (except for total return) for the period February 1, 1984 to December 31, 1990 were audited by other auditors whose report dated February 4, 1991, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at December 31, 1994 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Oppenheimer Investment Grade Bond Fund at December 31, 1994, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Denver, Colorado January 23, 1995
16 Oppenheimer Investment Grade Bond Fund ----------------------------------------------------------------------------------------------------- Federal Income Tax Information (Unaudited) ----------------------------------------------------------------------------------------------------- =================================================================================================================================== In early 1995, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 1994. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. None of the dividends paid by the Fund during the fiscal year ended December 31, 1994 are eligible for the corporate dividend-received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance.
17 Oppenheimer Investment Grade Bond Fund ----------------------------------------------------------------------------------------------------- Oppenheimer Investment Grade Bond Fund ----------------------------------------------------------------------------------------------------- A Series of Oppenheimer Integrity Funds =================================================================================================================================== Officers and Trustees James C. Swain, Chairman and Chief Executive Officer Robert G. Avis, Trustee William A. Baker, Trustee Charles Conrad, Jr., Trustee Jon S. Fossel, Trustee and President Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee Andrew J. Donohue, Vice President Mary E. Wilson, Vice President George C. Bowen, Vice President, Secretary and Treasurer Robert J. Bishop, Assistant Treasurer Scott Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary =================================================================================================================================== Investment Advisor Oppenheimer Management Corporation =================================================================================================================================== Sub-Advisor Massachusetts Mutual Life Insurance Company =================================================================================================================================== Distributor Oppenheimer Funds Distributor, Inc. =================================================================================================================================== Transfer and Shareholder Servicing Agent Oppenheimer Shareholder Services =================================================================================================================================== Custodian of Portfolio Securities The Bank of New York =================================================================================================================================== Independent Auditors Deloitte & Touche LLP =================================================================================================================================== Legal Counsel Myer, Swanson, Adams & Wolf, P.C. This is a copy of a report to shareholders of Oppenheimer Investment Grade Bond Fund. This report must be preceded by a Prospectus of Oppenheimer Investment Grade Bond Fund. For material information concerning the Fund, see the Prospectus.
18 Oppenheimer Investment Grade Bond Fund OppenheimerFunds Family OppenheimerFunds offers over 35 funds designed to fit virtually every investment goal. Whether you're investing for retirement, your children's education or tax-free income, we have the funds to help you seek your objective. When you invest with OppenheimerFunds, you can feel comfortable knowing that you are investing with a respected financial institution with over 30 years of experience in helping people just like you reach their financial goals. And you're investing with a leader in global, growth stock and flexible fixed income investments--with over 1.8 million shareholder accounts and more than $29 billion under Oppenheimer's management and that of our affiliates. 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